Gay faces new legal action

By
PATRICK BILLINGS, Court reporter

AUSTRALIA'S corporate watchdog says the "whole country" was disappointed with a $50,000 fine handed to a former Gunns' boss for insider trading.

Former Gunns managing director John Gay was convicted last year of selling more than $3 million in Gunns' shares while privy to price sensitive information in late 2009.

AUSTRALIA'S corporate watchdog says the "whole country" was disappointed with a $50,000 fine handed to a former Gunns' boss for insider trading.

Australian Securities and Investment Commission chairman Greg Medcraft said John Gay was being pursued under proceeds of crime legislation, and the matter would go to court this month.

It's the second time Mr Medcraft has spoken publicly about going after Mr Gay in the courts.

The former Gunns managing director was convicted last year of selling more than $3 million in Gunns' shares while privy to price sensitive information in late 2009.

His fine was strongly criticised as soft by some commentators.

Earlier this year a compulsory five-year ban on managing companies was overturned in the Supreme Court of Tasmania so Mr Gay could run two family companies.

Mr Medcraft told a Senate Estimates committee yesterday that the civil penalties available to the corporate watchdog were "woefully inadequate" when compared with other regulators both here and overseas.

He said seeking "triple damages" from offenders was important.

"So in the case of Mr Gay then, if he'd made a profit on his share trade of ... I think it was $800,000, but I stand to be clarified, under the triple penalties he'd be facing about $2.4 million," Tasmanian Greens senator Peter Whish- Wilson asked.

"Correct," Mr Medcraft said.

Penalties for insider trading have increased since Mr Gay broke the law, with triple damages now a sentencing option.

Senator Whish-Wilson asked if ASIC had been disappointed with Mr Gay's penalty.

"I think the whole country was," Mr Medcraft said.

ASIC has since referred Mr Gay's matter to the Commonwealth Director of Public Prosecutions for further action following a decision by the Australian Federal Police not to act.

The matter is expected to go before the Supreme Court in Hobart on June 12.